148 of 264 vanaspati units shut due to imports

New Delhi, Dec 17: More than half of the vanaspati manufacturing units in the country have been closed because of the India-Nepal Treaty, which allows duty-free import of the edible oil.

The treaty provides for import of one lakh metric tonnes of vanaspati per year from Nepal through State Trading Corporation (STC), which distributes it across the country.

According to offficial sources, of the 264 units of vegetable oil in the country, 148 units are either closed or non-functional.

However, the government denies the treaty as being the sole reason for the closure. It says the creation of production capacity not commensurate with availability of raw material, obsolete technlogy and poor economies of scale are some of the factors also affected the domestic oil industry severly.

In a memorandum to the Finance Minister P Chidambaram and the Commerce Minister Kamal Nath last month, the producers of the vegetable oil alleged that duty-free imports of the finished products under free trade agreements (FTAs) with Nepal, Sri Lanka and Bhutan have jeopardised the interests of the industry.

They also demanded the penal duty of 78.2 per cent on imports of crude palm oil from these countries be reduced to 20 per cent.

The government has assured to address the concerns of the industry. As part of the steps being taken to improve the health of the industry, import of oilseeds except copra has been allowed on Open General Licence (OGL), besides levying concessional charges on import of edible vegetable oils for manufacture of vanaspati.

Import duty on certain crude vegetable has also been kept low as compared to refined oils to faclitate raw material availabilty.

Also, the import of vanaspati from Sri Lanka under India-Sri Lanka Free Trade Agreement (ISFTA) has been restricted to 2.5 lakh metric tonnes per year.

Edible oils including vanaspati have been kept in the negative list under the agreement on South Asian Free Trade Area (SAFTA), from July 1, 2006.

UNI